REUTERS
The International Monetary Fund, Ukraine's key lender, decided on a new $1 billion disbursement for Ukraine after IMF experts had additionally analyzed a possible impact of a blockade of trade with Donbas on Ukraine's economy and updated macroeconomic forecasts, taking into consideration the estimates provided by the National Bank of Ukraine (NBU) and Ukraine's Finance Ministry, according to the NBU.
"The IMF experts concluded that the situation [around the trade blockade] would have a relatively moderate impact on economic growth and the balance of payments, and it would not put the NBU's inflation target at risk," the regulator said commenting on the completion of the third review of Ukraine's cooperation program under the Extended Fund Facility (EFF).
The National Bank says that the latest tranche of IMF finance was conditional, in particular, upon Ukraine making major progress toward a clean and stable banking system.
Read alsoIMF praises Ukrainian central bank's policy"I am deeply encouraged by the IMF's decision on the disbursement of the fourth tranche of funding provided under the EFF program to replenish international reserves and, consequently, to strengthen Ukraine's financial stability. This is a real vote of confidence from the international financial community," NBU chief Valeria Gontareva said.
She went on to say that rigorous stress tests for top banks, as well as commitment to improve standards, and decisive actions during successful nationalization of PrivatBank had played a major role in ensuring the stability of the county's financial system.
"The NBU will continue to work towards ensuring that all banks in Ukraine operate at the highest level of regulatory best practice and transparency, which we believe to be imperative to drive strong and sustainable growth for Ukraine," Gontareva added.
Read alsoIMF approves 4th loan tranche for UkraineAs UNIAN reported, the IMF Executive Board completed the third review of the Extended Fund Facility and approved the fourth loan disbursement worth US$1 billion.
The receipt of the fourth tranche of the IMF loan is an unprecedented event for Ukraine since the country has earlier suspended the implementation of loan programs at earlier stages, while the IMF halted its financing after the first, second, and once third disbursement.
The IMF urged the Ukrainian authorities to accelerate structural reforms to achieve faster and more sustainable growth, starting with the privatization and development of the agricultural land market. However, the IMF stressed that corruption needs to be tackled decisively.
Moreover, Ukraine cannot any longer delay comprehensive pension reform, including by raising the effective retirement age, the IMF said.